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Oklahoma City office market loses some energy

Oklahoma City office market is being driven by oil and gas industry, but even changes at giants Chesapeake Energy Corp. and Devon Energy Corp. won't necessarily have much long-term negative impact, according to two local commercial realty firms.

Chesapeake Energy Corp.'s slowdown is hitting the office market just as its buildup and buy-up did.

Two local commercial property firms noted the positive impact that Chesapeake's fortunes have had on the supply of office space the past several years — and the drag that a shrinking Chesapeake could have.

“Could” because both Price Edwards & Co. and Grubb & Ellis-Levy Beffort said that any space Chesapeake turns back to the market will be absorbed by other companies looking to expand or move into higher-quality digs.

Chesapeake also sold the former Caliber Center, a 280,000-square-foot Class A building, to IBC Bank-Oklahoma late last year.

Meanwhile, office developers are quiet, with no space under construction, even with low vacancies and rising lease rates because of uncertainty over Chesapeake's space needs, Price Edwards said.

“Chesapeake has been the suburban markets' best friend over the past several years by acquiring several hundred thousand square feet of space either by purchase of entire buildings or the leasing of significant blocks of space. With its disposition of several billion dollars in assets, Chesapeake's employee count is shrinking and with it it's appetite for space,” the firm said.

Chesapeake employs several hundred fewer people locally than its peak of nearly 5,000 — and around 12,000 nationally, down from 13,200 — according to government filings. At the same time, several buildings remain under construction on the corporate campus at NW 63 and Western Avenue, which means the company will require less space elsewhere.

Suburban ‘test'

“How well the market absorbs that off-campus space will be the true test of the suburban market's strength in the next few years,” according to the Price Edwards report, prepared by Craig Tucker, managing broker and office specialist.

Grubb & Ellis-Levy Beffort said any space Chesapeake offers for sale or lease will be filled “in short order” because the city lacks large blocks of contiguous Class A office space.